WHAT IS A REFINANCE?
- johnathanmcquoid
- Jan 17
- 2 min read
A lot of people think they know what refinancing is… but explaining it clearly is another story.
Here’s the simple breakdown 👇
🔍 What does “refinance” actually mean?
Refinancing lets you access the equity in your home by increasing your mortgage amount.
You’re basically borrowing against the value you’ve built — and rolling that borrowed amount back into the mortgage.
🏡 Here’s an easy example:
You buy a condo for $300,000
✔️ You put 20% down ($60,000)
✔️ Your mortgage starts at $240,000
Fast forward 4 years…
You’ve paid it down to $230,000.
Now you want to renovate, consolidate debt, or access cash — so you look at refinancing.
📈 Step 1: Get an appraisal
Let’s say your condo is now worth $350,000.
You owe $230,000.
That means your total equity is:
$350,000 – $230,000 = $120,000 equity
💵 Step 2: Access part of that equity
If you refinance and take $50,000, your new mortgage becomes:
$230,000 → $280,000
You get the $50,000 in cash, and the lender adds that amount onto your mortgage.
This is why people refinance — big purchases, renos, debt consolidation, investments, etc.
🏦 Why lenders allow refinancing
Because they get:
✔️ the loan secured against your property
✔️ guaranteed interest repayment
✔️ long-term stability since it’s added to your mortgage
🔧 Other ways to access home equity include:
• HELOC (Home Equity Line of Credit)
• Collateral charge
• Purchase-plus-improvements mortgage
Refinancing is just one of several options — but understanding all of them before you buy can save you money and stress.
💬 Thinking about a refinance or not sure which option fits your situation? Send The Frontline Mortgage Group a message. We’ll walk you through the numbers and show you what’s possible.